Blockchain VC Due Diligence
Hi and welcome to MBA Fridays, today’s article will discuss due diligence of blockchain ventures and the key questions entrepreneurs, business owners, and/or investors need to answer for their projects to be viable or investment to be feasible.
The following are a typical questions from a VC investor or fund which projects need to be prepared to answer to get full ears and eyes from them.
- Justification of token issuance? (How does the token serve a decentarlised economy?)
- Data collection, does it need a consortium?
- What kind of distributed, trustless ecosystem does scarce assets need consensus on, if any?
- Does the whitepaper include scenarios and technical specifications details?
- Where is the source code for the protocol?
- What is the lock in period?
- Is the smart contracts for the token sale published and audited?
- Who is the legal team?
- Where is the code repository?
- Is there social media engagement?
- What about blogging (Does the project team answers the questions?)
- Is there any interviews for the project team?
Project Examination
Characteristics:
- What is the competition?
- What is the Go-to-market approach?
- What is the product roadmap?
- What is the implied valuation and how did you arrive at it?
Resiliency:
- Where is the company incorporated?
- What is the legal structure?
- What is the token distribution structure?
- How is security handled?
- What are the regulatory risks?
- Have you did auditing?
- If there is a DAO like component, is it realistic?
- What is the token contracts and the token issuance software?
- What is the blockchain infrastructure backing the sale?
- What are the sale terms and conditions?
Transparency:
- Is the company providing public dashboards?
- Are auditors independent?
- What are the delivery promises measurements?
- Track record of public repository or GitHub
- What are the programme communications?
- Blogging reviews
- Team profiles
- Who are the external advisors?
- Will it be listed on exchanges???
Business Model:
- What is the token purpose?
- What function or utility does the token perform?
- Is it necessary to have a token?
- Is the tokenomic model viable?
Finally, is an ICO/STO needed??? and whether to develop a token (coin) or attach an existing one to the business model (pegging to an existing currency such as bitcoin, ethereum, etc)?.
For resources to help you answer these questions you can read my previous article The 12 Week Blockchain Venture MBA to get you educated on blockchain
Till we meet again with #MBA_Fridays, have a wonderful beautiful and joyful life, and don’t forget to spread the word and share it with your network and beloved ones.
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